Hill struggles to find bailout consensus

As stock prices fall sharply, congressional negotiators are struggling to find the consensus they need for quick approval of the Bush administration’s $700 billion bailout package.

Treasury has pitched its simple yet sweeping plan. House Financial Services Committee Chairman Barney Frank (D-Mass.) has added his ideas about cracking down on executive pay. Senate Banking Committee Chairman Chris Dodd (D-Conn.) has circulated a draft bill with more oversight, money for affordable housing, stronger controls and a provision giving the U.S. government an ownership stake in the companies it helps.

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While they’re far from agreement on the details, Frank and Dodd appear to be in agreement with Treasury Secretary Henry Paulson on the need for the bailouts themselves. But rank-and-file members — from both parties — are beginning to call that conclusion into question.

Members of the conservative Republican Study Group will hold an emergency meeting Monday night to discuss other approaches. New Jersey Republican Rep. Scott Garrett has circulated alternatives prepared by experts at the Brookings Institution, Heritage Foundation and the University of Chicago.

And liberals have begun to lay into what they see as just one more Bush administration power grab. On the House floor Monday morning, Oregon Democratic Rep. Peter DeFazio warned his colleagues against being “rolled by a Wall Street executive who is masquerading as the secretary of the Treasury.”

The markets are not amused. At midday Monday, the Dow was down, the dollar was down and the price of oil was up.

The challenge facing Paulson, Dodd, Frank and the party leaders in Congress: How do you strike a deal with one another while simultaneously persuading rank-and-file members not to give in to the hue and cry they’re hearing from back home?

Frank’s plan is much closer to Paulson’s original than is Dodd’s. There were bipartisan House talks with Treasury over weekend, and by 1:30 a.m. Monday the only points of disagreement seemed to be over limits on executive pay and some credit reporting requirements sought by the Office of Management and Budget.

Frank’s plan gets at the housing meltdown — the problem underlying the financial crisis — by proposing that the government use some of the leverage it gets from buying up assets to help prevent foreclosures. But Frank’s proposal is not binding. Dodd would address the problem more directly, allowing mortgages to be renegotiated in bankruptcy proceedings and potentially pumping money into affordable housing programs.

“Barney has a much closer relationship with Paulson,” one Senate Democratic leadership aide said. “But Paulson is going to have to negotiate with the Senate. … We need to strengthen the idea that taxpayers will have some protections.”